Welcome to the Global Payroll Association

Thank you for joining

Please feel free to ask us questions during the webinar, we will have 10 minutes at the end to answer these.

You can type your questions in the chat box or you can email them to webinars@globalpayrollassociation.com

Housekeeping

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Global Payroll: Taking a Practical Approach

Ragu Bhargava, Co-Founder & CEO, Global Upside

Ragu and his team at Global Upside help companies tackle accounting, payroll, HR, and compliance challenges in 90+ countries. Ragu goes by the mantra “impossible is not in my vocabulary” and has helped Global Upside clients successfully navigate some of trickiest business environments. In his previous avatars, Ragu was CFO at ActivIdentity (NASDAQ:ACTI) and held leadership positions in several companies including Deloitte and NetIQ (NASDAQ: NTIQ), where he helped the company grow from $20 million to $300 million+ in revenue.

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Founded 1999

Integrated accounting, payroll, HR, tax, compliance services

Consolidated services delivered via single point of contact in your time zone, 24/7 support

Serves both startups and established multinationals Clients including A10 Networks, Aruba Networks, 8x8, Enphase Energy, Real Networks, Rhapsody, Zillow, SmugMug and many more.

Global Upside Footprint

Ivan Makarov, VP of Finance, SmugMug

Ivan Makarov is the Vice President of Finance at SmugMug, photo sharing and e-commerce platform for photographers, where he’s been there for the last five years. In his capacity at SmugMug, he’s been responsible for a wide range of responsibilities, including leading Finance, Accounting, Treasury and Tax functions at the Company.

Prior to SmugMug, Ivan worked with PwC and Ernst & Young, as part of their Tax practice, where he performed various consulting and compliance services for a variety of tech clients.

He holds a B.S. and Master degrees in Accounting from Brigham Young University.

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Over a billion photos

Unlimited storage

Tools to take your photos to the next level

Showcase, share and sell with SmugMug

Wes Rihani, Multi National Account Sales, ADP

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Wes Rihani is a Global Business Consultant with ADP with over 25 years of deep domain expertise in Human Capital Management including Payroll & Time/Labor Management. He has worked with mid-size and large multi-national corporations identify total cost of ownership and develop comprehensive HCM solution architecture and process engineering to improve on organizational effectiveness.

Most recently, Wes has led a series of speaking engagements across the country on “the Art of Global Payroll Transformation.”

Serving more than 650,000 clients in 112 countries

ADP Streamline offers multi-country payroll and HR services solutions via a single vendor

Average client tenure of about 11 years

More than 67% of Fortune 500 companies and more than 80% of Fortune 100 companies use at least one of ADP’s services

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Key Considerations for Global Companies

Location Footprint (Small or Large?)Entity Setup / Activities Finding the right talent Hiring and Employment LawTax and Accounting Support Managing a global operation – centralize? Compliance

Setup and Strategy

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Plan for growth?

Permanent Establishment (PE) Risks

Intellectual Property (IP)Considerations

Management Support/Centralization

Where to? Start up Activities

Representative Office

Branch vs. Subsidiary

Payroll Setup

Money Movement

Accounting Setup

Tax Considerations

Company Law Compliance

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Registered Office

Resident Director

Substance Over Form (Tax Structure)

Data Protection Registration

Taxes: Payroll, VAT, Income, Others

Statutory Audit

Annual Reports

Global Payroll: Key Consideration, Compliance

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Not just payment of net payroll

Taxes, net pay computation

Payment of taxes

In-kind benefits: taxable or not?

Many reporting requirements besides W-2 or taxable wages e.g. fringe benefits

Pay slips: content, format and delivery (snail mail, electronic or both)

Coordinating with other functions: HR, talent acquisition, treasury

Pay frequency: once, twice, or advance

Payment before vacation

Country Focus: China

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Unique by jurisdiction (National, Provincial, District, City)

Housing provided by employers and regulations vary from region to region

Workers who have worked more than one year are entitled to 5 days of leave

Country Focus: Brazil

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13th Month (Remember to accrue)

Electronic reporting - new requirement in the last 12 months

Union dues - deductions of one day of compensation for members

Country Focus: Russia

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Employers required to maintain detailed working hours records

Must be paid twice a month

Bi-lingual employment contracts

Country Focus: France

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Highly regulated working hours requirements

Payroll registrations take time (matriculation of entity)

Complex pay slips: over 40 data fields

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Global Payroll Challenges

SmugMug is an internet-based business

A good portion of our workforce is remote

Need to be on top of all tax and legal challenges that come with our kind of setup

We also have to look for employees abroad, as we often hire from our customers

It’s challenging to keep up with the new developments and changing laws overseas

Outsourcing/working with a vendor was a good option

It has helped us stay on track

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Plan Ahead

Educate your staff about the basic challenges of having a world wide human capital

Proactively identify and implement strategies to minimize risk

Discuss all issues with hiring managers

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Payroll Accounting : “Tips and Tricks”

How SmugMug setup payroll in Korea?

Understand all issues up front

Have a good handle on costs of living and what you should be paying your employees

Be upfront about the challenges of relocating to a new jurisdiction

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Focus on ComplianceThompson Reuters Top Compliance Trends 2016

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Latin America Payroll: Main Challenges

Compliance requirements

• Can be complex and difficult to interpret, with frequent changes• Brazil, complex tax structure subject to frequent changes as governments respond

to developing economy

Detailed paper-based record keeping• Colombia, forms for new starters physically have to be taken to the authorities to

be stamped and signed, and copies sent to payroll• Argentina, employers register all employment relationships in a payroll book which

is inspected periodically by the Ministry of Labor • Mexico, employees must sign their pay slips and organizations are obliged to keep

receipts for a minimum of five years as evidence that payments have been made

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Many HR administrative requirements have an effect on payroll

• Onboarding, separation processing, time and leave processing and records management

• Requirement to sign pay slips, complex rules around hiring and firing in some countries

• In Mexico, for example, some organizations choose to make final/severance payments (“finiquito”) in front of a judge to avoid the risk of future claims from departing employees

Copyright © 2016 ADP, LLC. Proprietary and Confidential.

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ADP Research Institute 2016

* Data reflects the first 6 months of 2016

Number of Legislative Updates by Country

Country 2013 2014 2015 2016*

Brazil 3 10 48 15

Canada 5 7 76 47

Mexico 1 76 52

United States 22 14 48 15

Total 30 32 248 129

Americas

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Global Funding

Governance Model should help determine funding options

Registrations sometimes require local bank accounts

• E.g. Australia

• Statutory laws sometimes require only the employer to move funds

• Laws against money laundering

• Lodgment Services in APAC – Social Benefits in China

Leverage an In Country Provider

• Access to client’s account

• Trust account

Global Money Movement Platforms

• Major Banking institutions

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Critical Business IssueMultiple HR Systems - Increased Business Agility

PAYROLL

SYSTEMS 33

HR

SYSTEMS 31

GLOBAL HCM

DECISION MAKERS

SURVEY 2015

The average number of payroll and HR

systems /vendors and used worldwide has

increased ~ 50% from 2014-2015

Global SOR

Talent

TLM

ComplianceComp & Benefits

Payroll

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Employee record flow

Integration

Payroll Data

Employee Master Data

Compensation Data

Variable Data Time &

Expenses

Global HR System of Record

Global or LocalPayroll Enginesand Partner Network

Technology Considerations

Data Translation

Validation

Mapping

Localization

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Q&AIvan Makarov, VP of Finance, SmugMug

Wes Rihani, Multi National Account Sales, ADP

Ragu Bhargava, Co-Founder and CEO, Global Upside

If you have any questions for our panelists that we are not able to address in the Q&A please call +1 (408) 913-9130 or email us at info@globalupside.com

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Thank You